Dredging Up a Small, Nervous Gain November 2, 2011March 26, 2017 IS OUR NAME MUD? GLDD had a good quarter dredging mud (here) and the stock actually closed up yesterday (12%), as did a few of our others (NBIX was up 16%*). This, even as the Dow dropped 297 points on the surprise from Greece and the MF Global bankruptcy. So our little successes may be short-lived. The calamity that could befall global markets if the European situation does not in fact resolve itself in an orderly way is not reflected in the stock market. Then again, the calamity would be so huge that one just assumes a way will be found to avoid it. And yet. And yet. This is a time to emphasize: The stock market is never a place for money you will need any time in the next few years. And to ask: What could the Republicans have been thinking when they fought to water down the Dodd-Frank financial regulation, and what could they be thinking now in vowing to repeal it? Did you notice that MF Global was leveraged 40 to one before it went under? Why, after 2008, do we still allow firms to lever themselves up 40 to 1? And why do we still not have transparent derivatives markets, where regulators can see just how many trillions of dollars in sovereign debt ‘insurance’ our financial institutions may have written? The relentless Republican effort to obstruct or roll back regulation endangers us all – including wealthy Republicans, who you might think would have pressured their representatives to switch sides in this debate. So . . . ‘Occupy Wall Street?’ Yes, I think so. And see Margin Call if it’s playing near you. LET’S HEAR IT FOR THE OCCUPIERS Paul Lerman: ‘Here – from a very conservative Philadelphia Inquirer op-ed writer – is a positive take on Jack Bogle’s support of Occupy Wall Street.’ (Bogle is the small investor’s hero, having invented low-fee mutual fund investing at Vanguard. Like Warren Buffett, he is all about common sense.) THE SUPERCOMMITTEE ‘Both sides are to blame for the supercommittee debt impasse? No,’ says Michael Tomasky ‘it all comes down to Republicans and taxes. And the Democrats will give in yet again, and roll over on Pentagon cuts too.’ Depressing, but worth reading. And then joining the effort that the 99% of us should engage in to take the government back from the top one percent of the top one percent, whose interests the Republicans unfailingly protect. I’m not being partisan here, I’m being factual: just look at their votes. They will not allow taxes on the rich to be raised even at this time of extraordinary deficit and debt. Presumably, they are proud of this and feel they are acting in the nation’s best interest. I, and a wide majority of Americans disagree. * Guru: ‘NBIX may have data on its congestive heart failure product out by the end of the year. Based on published studies, it should work. Abbott (ABT) expects to start Phase III trials in endometriosis by the end of 2011. Data should be available in early 2013 and I have as much conviction as possible in the long-term success. Other programs at NBIX are progressing well. I think the stock rise today reflects the imminent start of the Phase III trial.’
A Cuban Immigrant in the Top 1% November 1, 2011March 26, 2017 NPSP Shares plunged yesterday on misinterpreted news that creates a buying opportunity but only with money you can truly afford to lose. I bought more at $5.20. If I weren’t a late sleeper, I might have paid as little as $4.53. ANOTHER 1% VOICE Carl Granados writes: It would be a nice idea for the 1% to write about themselves for your blog like the one you had yesterday. With that intent I am sending you mine. I am one of the fortunate 1%. I am a Cuban immigrant that came with my parents in 1960. My father was in the top 1% in Cuba but lost it there due to Castro. He came here, started from scratch and once again made it to the 1%. In the 60’s, when my father first got here, he did not complain about how high the tax rates were nor did he use it as an excuse not to work or become wealthy. He was happy as hell to have the opportunity just to be all that he could be. Like the Donald Trump’s of the world, I too went to work for my father in the family development business. Unlike most of the 1%, I don’t pretend that I got all that I did because of my genius or because God likes me better than someone else. The truth is that most in the 1% are there because they were born to the right family, married to the right person, had the right friends, and/or had lots of luck with health, genes, and being at the right place at the right time. I remember before Saint Reagan when one breadwinner brought home what it takes two for today. I remember when people used to work 40 hours, got two weeks paid vacation the first year working, when interest rates on credit cards were legally only a few points above prime, when we had Savings and Loan Banks, and when CEOs got fired when they did a crummy job. The policies that made this the norm FOX News calls Socialism. There was a time when I was a proud Republican because they believed government played a valuable role in maintaining and supporting capitalism. Many such as Ronald Reagan and George Bush Sr. (before they ran for President) believed in a woman’s right to choose keeping government out of a woman’s personal choices. I remember when Republican stood for fiscal responsibility not just tax cuts they used to bribe voters while paying for it with greater debt. I initially was a Republican for the same reason many Cubans were… because we blamed President Kennedy for the Bay of Pigs. It’s odd how one event can cloud a people’s mind for so long. I also believed in principles like taking government off people’s back, fiscal responsibility, strong defense, and making our country the most progressive on the planet. I was and still am a libertarian on social issues which Republican rhetoric claims to support. We need to understand that if we want to enforce the religious morality of certain faiths (majority or not) it curbs our freedoms, it replaces justice with a double standard, and keeps us from finding the best solutions for problems if they conflict with what we want to hear. Of course, as with most things GOP, what they claim and what they do are opposites. With leaders like Jesse Helms and Strom Thurman (and everyone in the GOP primaries this season) it wasn’t too long before I woke up. Today the modern Republican Party is a religion that survives on faith because its core tenets have been proven false over and over. Cutting taxes too much, especially for the rich, gets you votes but leads to more debt as Reagan and two Bushes have proven. Keeping choice from a woman or keeping gays from marrying makes government ON our backs not the opposite. One of its core principles seems to be ending abortion in any form while also ignoring those that are born without care, food, or love — and that makes no sense. Too much deregulation leads to loan shark rates on our credit cards, banks that need to be bailed out, and a Wall Street with CEOs that get paid like kings even when running a company into the ground. Finally it is true that the top one percent are job creators but mainly for people in third world countries and illegals taking care of their kids or cleaning house. Like anyone I hate paying taxes because I believe we do waste a lot of our tax money and stupid wars and to much military. Yes there are plenty of places to save though we may disagree where. I do know we need to invest more in education and make it cheaper if we are to compete in the world. I do know health care has to be affordable and accessible to all if we want a country that cares for its own. I do believe we have to concern ourselves with maintaining a livable planet instead of hoping it doesn’t go to crap before we pass on. Finally I believe if we go to war we have to pay for it not hope the good fairy will do it. I love America. I believe in investing in its people. I believe government plays a part that keeps Capitalism working. I do believe government can do something better and honestly than private business (could make a big list but would make this email too long). I believe everyone should compete equally, instead of limiting it to the ones that can afford the schools, medical bills, and technology, because it makes us stronger and healthier. I believe in taking care of the old who have helped make our country what it is. I also believe in paying our bills and not pushing it on to our kids. This means our taxes should cover our spending which should be simple math but Republicans most have failed that class in elementary school. I love this country because I care about everyone in it not just the lucky 1% like me. IS CHINA’S REAL ESTATE BUBBLE BURSTING? At least one developer is dropping prices 25%, to the consternation of recent buyers at full price. Here.
In Support of the Occupiers October 31, 2011March 25, 2017 Have you seen Margin Call? Wow, what a good film. And not completely irrelevant to questions about Wall Street. In the meantime, I commend to you this widely reposted recent essay. From Daily Kos: A Voice From the 1% by Gaius The impetus behind the Occupy Wall Street movement – a vague sense that the rich are getting ever richer while everyone else suffers – was confirmed by a recent report from the Social Security Administration showing that while total employment and average wages remained stagnant, the number of people earning $1 million or more grew by 18% from 2009 to 2010. Those figures give real substance to the “We are the 99%” slogan, yet Republicans continue to insist, despite all evidence to the contrary, that if anything those “job creators” deserve an even greater share of our national income. The Tea Party, meanwhile, has launched its own “53%” movement, inexplicably rallying the working class to the defense of the wealthy. The one group rarely heard from in this rancorous debate is the 1%, whose incomes and taxes are its focus. I am one of them, and here is my perspective, which may surprise you. First let me note that I am not part of the yacht and private jet set, which represents an even smaller subset of incomes than mine. The threshold for inclusion in the top 1% of income earners in 2008, the most recent year for which published data is available from the IRS, was $380,354, enough for an extraordinary life but nowhere near enough for a harbor berth in St. Moritz. Nevertheless, I am – for now – comfortably ensconced in that demographic. Herman Cain’s 9-9-9 plan would save me roughly $400,000 a year in taxes, and President Obama’s tax proposals would cost me more than $100,000, yet I support the latter and consider the former laughable. Thus you can imagine my amazement this summer when I watched the Republicans in Congress push the United States to the brink of default – and the world to the brink of ruin – over whether to repeal a portion of the Bush tax cuts and raise my taxes by 3.5%. I know a lot of people with high incomes and even the conservatives among them were confused by that sequence of events. Here is a secret about rich people: we wouldn’t have noticed a 3.5% tax increase. That is not only because there isn’t a material difference between having $1 million and $965,000, which is obvious, but also because most of us don’t actually know how much money we are going to make in a given year. Most income at that level is the result of profits rather than salary, whether it comes in the form of bonuses, stock options, partnership distributions, dividends or capital gains. Profits are unpredictable and they tend to vary wildly. At my own firm, the general rule of thumb is that if we are within 5% of our budget for the year, everyone is happy and no one complains. A variation of 3.5% is merely a random blip. I was not amazed but disgusted when John Boehner and his crew tried to justify the extremity of their position by rebranding the wealthy as “job creators.” While true in a very basic sense, it obscures the fact that jobs are a cost that is voluntarily incurred only as a result of demand. Hiring has no correlation at all to profits or to income – none. Let me keep more of my money without increasing customer demand and I will do just that – keep it. Perhaps I will spend a little more of it, though probably not, but even if I do it won’t help the economy very much. Here is another secret of the well-to-do: we don’t really buy much more stuff than everyone else. It may be more expensive stuff, sure, but I don’t buy cars, or appliances, or furniture, or anything else more frequently than the average consumer. The things I do spend more money on are services such as travel, entertainment, restaurants and landscaping, none of which generate well-paying middle class jobs. There, in a nutshell, is the sad explanation of what has happened to the American economy over the last 25 years of “trickle down” economics. That’s why I was so pleased when the Occupy Wall Street protests began. I support them wholeheartedly, for several reasons. First, because I fervently believe in the exercise of first amendment rights, and I have been waiting for years for the American people to wake up from the torpor of the Bush years, when they were seemingly cowed into submission to corporate authoritarianism. Second, because I am dismayed by the thuggish tactics of the NYPD. I would have expected as much from Michael Chertoff or Dick Cheney, but not from the Bloomberg administration. Third, there is no question that the increasing income inequality in our society is a bad thing, in the short-term and the long-term, for both workers and for business. It is bad in every way and for everyone, with the sole exception of Wall Street itself. Fourth, I love the hysterical reaction it has provoked from arch-conservatives such as Eric Cantor and Glenn Beck. As George Orwell wrote in “Homage to Catalonia” about fighting fascists, I don’t always need to know what I am fighting for when it is clear what I am fighting against. Fifth, and most important, it changed the national media narrative and sucked almost all of the energy out of the tempest that was the Tea Party. It is the Tea Party’s effort to recapture that energy, through the “We Are the 53%” movement, that has truly bewildered me. I have spent far more hours than I should have these last few weeks puzzling over the postings on that website, trying to understand who these people are and why they would possibly care about my taxes. I don’t really have an answer to those questions, but I do have a few insights. To begin with, a fair number of the posters there don’t seem to understand the actual issues, or even the meaning of “53%,” which is supposed to refer to the percentage of people in recent years who actually owed – and paid – federal income taxes. From their own descriptions of themselves as unemployed, underemployed, or struggling to raise families, it seems likely that many of these posters actually AREN’T part of that 53%, but rather, like most of the 47% they complain about, receive full refunds of their taxes each year, or perhaps even more thanks to the Republican-sponsored family tax credits. I suspect they think that because they work, and have taxes withheld, and file a tax return, they are different than the “47%” they decry as lazy layabouts. Of course they are not, but sadly they don’t even realize it. Next, ALL of the posters there seem quite proud of themselves. No doubt they should be, but they seem to have derived very different conclusions from their life experiences than I have from mine, which could read like an exaggerated version of one of their posts. My family is from one of the poorest counties in the country, in rural Appalachia. My grandfather was a coal miner who left school after 5th grade to help support his impoverished family. My grandmother wasn’t allowed to attend high school because according to her parents women didn’t need an education. I never knew my father. My mother and I subsisted on food stamps for several years. I got my first job at 13, working as a bus boy for $2 an hour, and I have never been unemployed in the 37 years since. I worked my way through college, which I paid for myself. When I started my career I worked 60+ hour weeks every week for nearly 15 years before that effort began to pay off. I employ nearly 20 people, I have no debts, and I have no doubt that I have earned every penny I have. And yet, I am living proof of Elizabeth Warren’s maxim that no one gets rich on their own. If not for the UMWA helping to secure a living wage for my grandfather, I would probably have had to leave school to help support my family, as he had done. If not for my grandmother’s passionate belief in the value of the education she was denied I would never have aspired to go to college at all, and if not for my mother teaching me to love books, I would never have been able to succeed there. If not for my wife I would never have been inspired to work as hard as I did to see what I could become in life. How many smart, talented children don’t have those positive influences? How many have exactly the opposite? My good fortune did not end there. It was sheer luck, rather than moral virtue, that I never had the criminal record many of my less fortunate friends did when I was young. It was sheer luck that neither I nor any of my family members ever had a major illness, or accident, or disability, despite lacking health insurance much of the time. How different my life could easily have been! How different the lives of others still could be. I understand too that but for food stamps, I would have gone hungry as a child, that but for public subsidies and federally guaranteed loans I could never have afforded college. I know that without the internet and airports, both of which were developed with federal taxes, I could not earn an income even close to what I make today. That all seems so obvious to me that I don’t understand how anyone could question it, and those are just a few of the many reasons I am happy to pay my fair share of taxes, whatever that share maybe. Paying a lot of taxes just means you make a lot of money, and it is hard, frankly, to complain about that. One last observation. Many of the 53% crowd seem quite proud of their Christian faith. I am not religious myself, but I am reasonably certain that Jesus would not respond to the poor and unemployed with shouts of “Get a job!” I vividly remember what it was like to be poor. To be concise, it sucked, and my heartfelt sympathies automatically go out to anyone who has to experience it, especially children who are blameless for their circumstances. Whenever I meet someone who has not been as lucky as I have been, I recognize how easily our roles could have been reversed by the random forces of fate. And despite my lack of religion, I instinctively think “There but for the grace of God go I.” If only those who actually believe in God would think the same thing more often they might not be so eager to cut my taxes. Originally posted to Gaius on Fri Oct 21, 2011 at 12:48 PM PDT.
Science and Happiness October 28, 2011March 25, 2017 AASIF MANDVI ON: SCIENCE Treat yourself to these very funny 6 minutes: Rick Perry, Michele Bachmann, Rick Santorum, and some very cute science fair kids. Then, if you have a few minutes more (and don’t mind blue humor), watch John Stewart’s lead-in to that clip. In it, he notes the hullabaloo that Fox News and others made over ‘Climategate’ (the emails that suggested scientists may have been phonying data to support the global warming thesis) . . . then notes how effective that hullabaloo was at sowing doubt in the public mind . . . and, finally, contrasts that relentless coverage with the near total silence that greeted release . . . in the Wall Street Journal no less . . . of research . . . funded by the Koch brothers no less! . . . that . . . wait for it . . . debunks Climategate. Turns out, according to the Koch brothers-funded research, the science was right all along. Yet the debunking of that misinformation got a total of 24 seconds of cable news coverage. It was reintroduction of McDonalds’ McRib that grabbed the TV news. Just like ACORN: The allegations got 24/7 coverage. The exoneration? Not a peep. And so our nation is weakened, one misinformation campaign at a time. PAUL VOLCKER ON DODD-FRANK AND THE VOLCKER RULE A lot of liberals think the Administration caved on ‘the Volcker Rule.’ Paul Volcker disagrees. He gives the Administration good marks. TOUGH TIMES FOR TWENTY-SOMETHINGS EARNING $500,000 A YEAR Happiness, I have long argued, is a matter more of direction than amount. To quote my own book (reviewed here), ‘I believe happiness lies less in how much you have than in which way you’re headed. Consider two young families, one with an income of $200,000 a year but somehow knowing it is headed down to $150,000; the other earning $30,000 a year but somehow knowing it is headed up to $50,000. I submit that the family earning $30,000 a year, though far less affluent, might well be the happier of the two.’ Jim Chanos: ‘See last three paragraphs of this story. Only on Wall Street would a 27-yr old trader whine about making less than $500,000 this year, despite having to ‘work harder.’ And they wonder why people are angry?!’ DVAX – UPDATE TO YESTERDAY’S UPDATE Guru: ‘In a surprise about three months earlier than expected, they announced the results of the hepatitis B vaccine trial in patients with chronic kidney disease [yesterday]. Not a surprise, they showed superiority to the currently marketed hepatitis B vaccine with no evidence of a safety problem. Patients with chronic kidney disease are immunosuppressed. The ACIP of the CDC has already recommended all such patients get hep B vaccines. This Phase III data can now be added to the FDA filing for the hep B vaccine. It seems reasonable that they would get a partnership with one of the vaccine companies for the hep B vaccine. They used to be partnered with Merck. Perhaps Merck will return. Either way, their hep vaccine should eventually come to dominate much of the market when it is launched next year. They also have earlier-stage products in their pipeline in collaboration with Glaxo, Novartis, and Astra Zeneca. All that said, there were a number of negatives on yesterday’s analysts call that suggest we move out of this stock and into something else for the time being: (1) The company will not file for FDA approval in 4Q 2011 (their previous guidance), but rather in Jan or Feb 2012. It’s not a big delay, but it’s a delay. (2) The company is hoping for priority review (6 months), but it is more likely they will get standard review (10 months) and they will have a panel meeting to review the possibility of autoimmune side effects. (The data indicate overall that there are no differences, but it sounds like this issue will need a thorough sorting out.) (3) The company expects to market the vaccine by themselves in the people over 40 years old, excluding diabetics. This means no partner – something different from what we have been expecting. (4) The company will file today’s kidney failure data as a supplement, so this data will NOT be part of the first approval. (5) Consultants at the meeting emphasized that sales of vaccines in adults grow slowly, compared to sales of vaccines in children. Thus, even assuming a launch in 2012, sales might not hit a target of $300 million for several years. (6) European approval will also proceed slowly and not occur until 2013. Bottom line: the product works really well, but we are at least a year away from getting a product launch and then sales may progress slowly. You win some, you try not to lose to badly on the others. Maybe in this crazy market it goes higher. But I think there will be better opportunities in the short-term.’
Hope Even For Some of Our Speculative Biotechs October 27, 2011March 25, 2017 REPUBLICANS Kevin Brown: “What struck me about yesterday’s David Frum piece [“It’s Time We Republicans Finally Admitted That Paul Krugman Might Be Right”] was this line: ‘Can it be that our enemies were right?’ Really, David? Enemies? Disagreeing on politics or economics is one thing, but equating those who disagree with you with North Korea, terrorists, the French? (That last one is tongue in cheek, I point out.)” A GRAND TIME TO BE RICH AND POWERFUL As widely reported yesterday, the Congressional Budget Office found that from 1979 to 2007, average inflation-adjusted after-tax income grew by 275% for the top one percent, compared with 18% for people in the bottom fifth (and not quite 40% for people in the middle three fifths). And as noted yesterday, the Republican front-runners believe the top one percent need still further help, which the bottom 99% would wind up providing. HOUSING HOPE Not having been able to get the Republican controlled Congress to do anything (they literally control the House and have essentially controlled the Senate by “filibustering” anything a majority might otherwise pass – those being “snicker quotes” around the word filibustering, as my old mentor, New York Magazine editor Sheldon Zalaznick used to call them . . . in this case because the senators, in their wisdom, long since removed the requirement to actually stand up all night talking in order to filibuster a bill) . . . the President is doing all he can to get the economy moving and help families that are hurting without the approval of Congress. Tuesday, he announced an important rules change that could help a million or so homeowners whose homes are under water (worth less than the mortgage balance) refinance at the prevailing interest rates. That will save them thousands of dollars a year, make it easier for them to stay in their homes, make it less likely those homes will go into foreclosure blighting their neighborhoods further, and making the loans more secure for the lenders, because a borrower is less likely to default if his payments are lower. Helping a million families isn’t enough; but a million here and a million there, and – to paraphrase Everett Dirksen – pretty soon you’re talking about real progress. STUDENT LOAN HOPE Yesterday, as reported by CBS: Speaking to a crowd of college students in Denver, Colorado, the president outlined a new “Pay As You Earn” plan. The proposal would expedite the timeline for an already-approved loan repayment plan that would lower monthly federal student loan payments for Americans whose burden of debt is disproportionate to their earning abilities. According to the original plan, which Congress approved in 2010, borrowers would be able to reduce their monthly payments from 15 to ten percent of their discretionary income as of 2014. Additionally, that plan dictated that the balance of their debt would be forgiven after 20 years of payments rather than in 25 years. On Wednesday, the president said he would use an executive order to make those benefits available to borrowers as early as 2012. ☞ To keep taxes on the rich at historic lows, Republican prefer to cut funding to state universities, which drives up tuition (and thus student debt). They also opposed the President’s plan – passed along with the health care bill – that removed the banks from getting in between student borrowers and the federal government that was guaranteeing the loans anyway. UPDATES Guru: TTNP ($1.51 up 24 cents yesterday but still below the $1.77 some of us paid this summer): “The company met with the FDA Tuesday and received the green light to file for approval. There had been some concern after the last call that they did not have enough patients treated for at least six months, but based on our analysis and what they said came out of the meeting yesterday, it appears that they do have enough. I believe a green light to file for approval from the FDA is what most partners were looking for, so I expect they will be able to close a partnership – or possibly sale of the company – fairly soon. Can make a case for $4/share without working too hard. Stay tuned.” As always: only with money you can truly afford to lose. These things do NOT always work out. DVAX ($2.75, about unchanged from first mention): “The ACIP division of the CDC formally voted to put diabetics under age 60 on the list of ‘high risk’ people who should get vaccinated. They also voted that diabetics over 60 ‘may’ get vaccinated as well. There was no formal recommendation for a specific vaccine, since the two approved vaccines are virtually identical, but they did report that the current vaccine does not produce adequate protection in a significant portion of diabetic patients. DVAX recently presented data from their Phase III trial showing very high levels of protection: much higher than in the currently approved vaccine. DVAX has an ‘investor day’ Thursday [i.e.: today] and it expects to file for approval this quarter, setting up potential approval in 2012. Although small cap biotech stocks can be very volatile, DVAX should trade into the $4-$6/share range next year on approval.” As always: only with money you can truly afford to lose. These things do NOT always work out. CRME ($3.38, down from $4.60 nearly a year ago): “I do believe it will be higher in a year. Merck has consolidated its position and now owns rights to the intravenous and oral forms. The intravenous is approved in Europe and is generating sales. In the US, we await a decision on whether Merck will restart the US phase III or whether it has enough safety data (efficacy is not in question) to file for approval in the US. Merck is expected to start the Phase III oral soon. The biggest problem is that we are at the mercy of Merck to provide the news. However, there is no question that the product works and is safe in its indication. The competitor from Sanofi has lots of problems. So I believe next year we will have a successful intravenous outcome in the US and be close to a successful oral outcome. On that basis, I expect it to move towards 7/share.” As always: only with money you can truly afford to lose. These things do NOT always work out. KERX ($2.92, way down since first mention at $5.25): “They have results of a Phase III trial in colorectal cancer out by the end of the year or early 2012. There is some real controversy about this one. KERX recently published a Phase II trial in 38 patients. It looks flawless and highly successful. I don’t see any holes in the data. The caveat is that 38 patients is a very small number. IF there were imbalances at baseline in only a few patients, then such imbalances could skew the data to make it look like it is working when it is not. The molecule, perifosine, is structurally similar to miltefosine, which was studied extensively for cancer and abandoned for lack of efficacy. The perifosine Phase II was done as an adjunct to capecitabine, an approved drug for colorectal cancer. Neither perifosine nor miltefosine as a single agent has a meaningful effect on cancer. There is a valid mechanism to back perifosine’s benefit, but mechanism data don’t guarantee success. So while I can say the Phase II data look as good as they could for a small trial at this stage, there is a lot of risk based on the history of these types of compounds. Behind perifosine in their pipeline is Zerenex, an iron-based agent for high phosphate in dialysis patients. There is no question it works – it has been launched in Japan. We are awaiting the results of a one year-safety study and expect it to be positive. Some analysts show a valuation model in which at $3/share there is no value ascribed for perifosine. I think such a valuation is aggressive and expect that if the colorectal cancer data does not work, the stock will drop a point or more. There then should be a recovery in anticipation of Zerenex data, but Zerenex will also require a commercial partner. So under the outcome that perifosine doesn’t work, I expect the stock could be 2-3/share a year from now. IF the perifosine data succeeds, I expect the stock to be 6-10/share next year, but it is high risk.” Thus: only with money you can truly afford to lose. ALXA ($1.35, up 35% from first mention): “They just announced they will have an FDA advisory panel meeting Dec 12. ALXA has a device that delivers an approved drug for acute schizophrenia in a puff to the lungs, allowing it to get very rapidly into the blood. The onset of action is faster than taking the drug orally or as a shot. There is no question it works and several opinion leaders have spoken favorably about the therapy. The FDA has been concerned, however, that in the trials, patients with asthma or COPD saw some decline in lung function. The company proposes to exclude those patients from the label. Since this product is used only acutely – one or two puffs in the emergency room – I don’t think the issues in asthma or COPD patients should derail the product. I expect the panel will vote ‘yes.’ I note, however, that the FDA has been very cautious on drugs administered to the lung that are not for lung diseases. It did approve Pfizer’s inhaled insulin for diabetes (a product no longer being marketed), but has not approved a similar product from MannKind despite numerous attempts. Inhaled insulin is taken chronically, so a very different situation from ALXA. Still, I’m not sure what the FDA’s perspective is on ALXA and they have been cautious about these ‘inhaled delivery’ products. If the panel votes yes, ALXA should trade to the range of 2-3/share.” Only with money you can truly afford to lose.
Republicans One, Two, Three, and Frum October 26, 2011March 25, 2017 RICK PERRY RESCUES THE RICH Jonathan Bernstein, writing in the Washington Post: “Rick Perry finally released his ‘flat tax’ and budget plan today. Boil it down and what you’re left with is tax cuts for the rich and tax returns they can do on postcards – while offering nothing but more complexity for everybody else. . . .” MITT ROMNEY, TOO He’d keep the Bush tax cuts for the wealthy and, sweeter still, eliminate the estate tax – even on billionheirs. AND THE FRONT RUNNER, MOST OF ALL Herman Cain – who in the latest poll not only tops Romney again but is miles ahead of Perry – has the most regressive plan of all. A massive tax cut for the rich, who would now pay just 9% on their income and 0% on their capital gains. REPUBLICANS: PLEASE READ This, from Henry Blodget: DAVID FRUM: It’s Time We Republicans Finally Admitted That Paul Krugman Might Be Right By Henry Blodget Few economists have been more correct about the economic crisis of the last several years than the proudly liberal Paul Krugman. Krugman spotted the “liquidity trap” early on (since the problem with the economy was too much debt, cutting rates and creating easier money would not get us out of it). Krugman shot down the hyperventilation about a coming hyper-inflation, arguing that the global labor glut would prevent easy credit from inflating wages. Krugman quickly pronounced the Obama Administration’s stimulus as far too small and said it would not get the job done. Krugman scoffed at the idea that interest rates were about to skyrocket as our creditors decided en masse that we were so fiscally irresponsible that they couldn’t possibly lend us any more money. Krugman has been wrong about some things, but he has been right on all those counts. Recently, Krugman has denounced the “austerity” push of the GOP, arguing that tackling our debt and deficit problem right now with spending cuts is the worst move we can make. Such cuts, Krugman argues, will put more people out of work and shrink the economy. And this, in turn, will increase, not decrease, the deficit. Krugman thinks we should tackle the debt and deficit problem later, when the economy is on more solid footing. He points to record-low interest rates as a sign that the world is still willing to lend us as much money as we want, practically for nothing. And he argues that, instead of cutting back, we should be using that money to build infrastructure, strengthen the economy, and put more Americans back to work. And some Republicans, it seems, are starting to notice. A couple of months back, Republican commentator David Frum made a startling observation on his site: Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right? Will Frum be ostracized for that remark? After all, Paul Krugman is supposed to be Public Enemy No. 1. Or will more Republicans begin to agree that, although government spending does indeed need to be cut eventually, and the debt problem does need to be addressed, suddenly chopping, say, $1 trillion of government spending next year is not the best way to get ourselves out of this mess? ☞ And by the way, argues Krugman, we are not the only ones who need a massive infrastructure program rather than slashing budgets – Europe does, too.
Is It Really Okay for a Judge to Vacation with One of the Parties to the Case? Seriously? October 25, 2011March 25, 2017 YOUR CELL PHONE BILL Are you paying too much? BillShrink.com will grab your cell phone records (if you let it) and recommend a better plan based on your usage and the months left on your contract. Free. THE COURT Growing up, we thought of Supreme Court Justices as above reproach. Now it’s beginning to seem as though they’re simply above the ethical standards that apply to lesser judges. Watch. And then consider hosting a screening. ROMNEY ON THE FLAT TAX As reported here: 1996: “A tax cut for fat cats.” 2011: “I love a flat tax.”
Angry Birds October 24, 2011March 25, 2017 The President has ended the war in Iraq; eliminated Osama Bin Laden and much of Al-Qaeda’s top tier; and led the world in liberating Libya at the cost of not a single American life. The Palestinians privately want to see Obama reelected, and the Israelis say he’s a steadfast ally. The Libyans, we are told, actually like us. (“Thank you, America!”) . . . “Without America, we would not be here,” Ismael Taweel, a businessman, told [Nick Kristof] as he stood by Martyrs’ Square with a huge grin on his face. “I hope there will be more relations between Libya and America now,” he added. That’s a common refrain: Libyans are hungry to rejoin the world. . . . ☞ It’s good to have a strong, deliberate Commander in Chief.* REINVENTING FIRE Watch this to learn how we can “change energy use forever by transitioning to an economy powered by efficiency and renewables by 2050.” Amory Lovins’ new book is out: Reinventing Fire. ANGRY BIRDS I held out as long as I could. But we have to get those smug little pigs. *And, by the way, a magnificent Secretary of State.
The World Is A Better Place October 21, 2011March 25, 2017 QADDAFI “Mr. Obama’s carefully calibrated response infuriated critics on the right and left,” reports the New York Times, “who blamed him either for ceding American leadership in a foreign conflict or for blundering into another Arab land without an exit strategy. But with Colonel Qaddafi joining the lengthening list of tyrants and terrorists dispatched during the Obama presidency, even critics conceded a success for Mr. Obama’s approach to war — one that relies on collective, rather than unilateral, action; on surgical strikes rather than massive troop deployments. ‘I think the administration deserves great credit,’ Senator John McCain, Republican of Arizona, said in an interview on CNN. ‘Obviously, I had different ideas on the tactical side, but the world is a better place.’ ” Add this to the list. Speaking of which: THE LIST – III Andrew Sullivan yesterday quoted one of his readers with a far more succinct, and thus powerful, list of Obama accomplishments: The truth is that this President has done a good job in what has been one of the most difficult periods of modern history. He saved the economy from ruin (until the Tea Party took over Congress) with a stimulus that was as large as possible given the political realities, presided over a stock market that fairly quickly recouped many of its losses, presided over almost consecutive monthly increases in private sector job growth (unfortunately balanced by monthly decreases in public sector jobs which I attribute to the GOP further starving government), enacted the only meaningful healthcare reform ever in our history, passed financial reform (no matter what the Left says, he did this), saved the auto industry (which Romney is on record opposing), fired the first salvo of the Arab Spring with his address in Cairo no less, drawn down our footprint in Iraq in a responsible way (and headed toward almost total withdrawal), stopped numerous terrorist attacks in this country, stopped torture as policy, repealed DADT, joined the international community in a measured and responsible way to bring down an odious tyrant in Qaddafi, and killed a whole generation of al Qaeda leaders. And taking out Osama bin Laden the way he did will go down as one of the bravest military actions in American history. I know this President is not popular, and it is very unpopular to defend him in such a way. I don’t care. For this country to dump him for anyone on the other side would be a terrible thing. Progress is slow and painful, but we are doing it. Is that fashionable to say? No. Again, I don’t care. THE LIBERTARIAN CONSERVATIVE BILLIONAIRE TEA-SWILLING CHRISTIAN RIGHT “A profoundly significant new political alignment within the right flank of the Republican Party is becoming entrenched in American politics . . . For Independents, moderate Republicans and Democrats this new alignment should be a wake-up call that the foundations of Democracy are always fragile and the promises of America must never be taken for granted.” Read all about it.
Enough Sniping - at the wrong target - October 20, 2011March 25, 2017 WARREN BUFFETT’S CHAIN LETTER (NOT) Mike Duffy: “Usually when I get a ‘XXX wants you to forward this to N people’ message, I check its veracity on snopes.com. Here’s what they have to say about Warren Buffett’s alleged chain letter. If you haven’t already mentioned it to them, your readers might benefit from knowing about Snopes.” ☞ I use Snopes frequently – and when I don’t, I usually regret it. THE LIST Steve: “Lawrence Lessig wrote Republic Lost and was on NPR Tuesday. He cites Obama as a failure for promising to change the way business is conducted in Washington but being exactly like every other pol who seeks $ and re-election over everything else. Lessig pretty much summed up my thoughts. We can vote for Obama or one of the dwarves, it doesn’t matter in the long term. If you have to list Obama’s accomplishments, Andy . . .” ☞ Steve’s negativity is both unfair and counterproductive – and just plain wrong – though I know it comes from justifiable frustration and values that we all share. Unfair, because, for example, the President and the DNC take ZERO money from Washington’s more than 10,000 federal lobbyists and PACs – even though the RNC does and it’s how “business [has long been] conducted in Washington.” This policy has cost us tens of millions of dollars, yet Steve counts it as nothing. Unfair, because the President has worked so hard – to the dismay of so many of my fellow liberals – to try to work with the other side. Yes, he failed to change the culture of Washington, but not for lack of trying. You blame him for that; I blame the other party. Just plain wrong, because the world would have been SO different if Gore had been allowed to serve, SO different if Lindbergh had defeated FDR (did you read the Philip Roth novel imagining that?), SO different if McCain/Palin were today running the show. It’s preposterous to say “it doesn’t matter in the long run” who wins. The last decade would have been about the same either way? Give me a break. Counterproductive, because negativity saps the enthusiasm needed to advance the causes we share. Enough, Steve: If you really care about all this, as I know you do, get to work – volunteering for Obama, registering new voters, bucking up existing voters, pushing back on your fellow naysayers – and not dismissing three years of incredible accomplishment (given the context) because it’s “a list.” (“If you have to list Obama’s accomplishments, Andy . . .”) Don’t snipe at the good guys, Steve, help us beat back the bad guys. (For the things we believe in, the Koch Bros, Karl Rove, et al, are bad guys.) Feel free to pass this on to Lawrence Lessig. SMBC Aristides’ Chris Brown: “SMBC reported another great quarter. EPS of $1.21. Earnings are still benefitting from the tailwind of the FDIC-assisted transaction last year. Company reported both deposit and loan growth. The ratio of tangible common equity to assets ticked up about 10 basis points and is on pace to easily exceed 7% within 3-4 quarters. Equity/assets is now 9.6%. Loans and deposits both grew quarter-over-quarter. Credit quality improved from perfect to more perfect. With great earnings like this, and great asset quality, I’m leaning more towards the view that management will not issue shares here. Tangible book value per share is $22.51, up from $17.19 a year ago! Short of Armageddon, I think it is going to be a very good next 12-24 months for shares of SMBC.”